International Trade

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Running Head: International Trade and GATT/WTO 
 

International Trade Ethics

& GATT/WTO Involvement

Derek Shamberger
Central Michigan University
MSA/699
August 10, 2012
* Dr. Ted Helmer
*

Literature Review
For the international business community corruption spreads like a disease with unpredictable properties. The General Agreement on Tariff and Trade (GATT) and World Trade Organization gives the assurance that producers/exporters are accountable for their trade practices while promoting good order throughout the global economic environment. Countless officials consider these regulations incompetent compared to the bribes and secrecy groups controlling economic details to accommodate their agendas. Particularly in the Third World nations with non-tariff barriers, the connection between individual immoral interests and vast opportunities for profit develops into dilemmas that affect the masses. The society of business has never been ethically sound but managers of multinational corporations (MNC) must constitute means of understanding ethical standpoints, different cultures along with tariff/trade regulations.

The World Trade Organization (WTO) is the youngest of the international organizations, created in 1995 after the General Agreement on Tariffs and Trade (GATT). The purpose of the World Trade Organization (WTO) is to ensure that global trade between nations flows in the direction of positive progress through international rules and agreements. All nations are built on the activity of trade; playing the roles of both consumers and producers, while supplying services for developmental stability. In business, international trade is a reflection of globalization, and relations among nations, are connected through understanding each countries standpoints for growth. For the past twenty five years rapid integration of the financial world along with an epidemic of corporate scandals, has amplified scholarly awareness in politics, corruption and corporate social responsibility (CSR). Political, social, and economic institutions affect the behavior of multinational enterprise (MNE) because they are subject to the authority of multiple sources of sovereignty. These barriers push MNE to utilize whatever loopholes possible to meet their agenda. Loasby (2001:3) states the international business has a new agenda, which is based on four principles. The first consist not of the certain features and policies of an organization, however on a general system view. The second principle focuses on the primary determinants of an MNE’s organizational structure which are the costs of obtaining the information required for high-quality decisions and the volatility of the environment. Next is to link entrepreneurship within a network that meets the needs of the MNE along with the post country cultural outfit. Finally he states, a need for a broader psychological and social context of international business should be embedded within the social structures to support high-trust relationships rather than opportunistic behavior. Through globalization, free trade, and financial flows, old frameworks will dissolve allowing certain nations to have more control over their particular economies but various government officials do not want to relinquish this control. In various subservient countries under political rule, MNE are not welcomed unless they adhere to the officials’ demands regardless of the social issues at hand. Resources such as water and wood are controlled by corrupted governments leaving the society under supreme law. MNEs must not fall prey to these ploys, should produce a strategic plan for investigating motives and negotiate with governments ethically. Luo (2006) states, “more than ever before, MNEs are now expected to account for all aspects of their...
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